The estate tax is something that many people have a problem with not because they are unwilling to carry their fair share of the tax burden, but because it is simply hard to find any logic supporting it. It should first be noted that the estate tax was repealed for 2010 due to a provision in the tax reform act that was passed in 2001, but it will return next year. During the repeal things seem to have proceeded about the same way that the did in 2009 when the tax was in place. So how is a return of this tax going to suddenly make any noticeable difference to anyone other than those who have to pay it?
Consider the way that your estate coalesced over the years. You earned income that was taxed. Then you took your after-tax income and made purchases, saved some of it, and invested some of it. You then paid property tax, capital gains tax, sales tax, and any number of other taxes. Whatever winds up in your estate after you have lived your life is going to be what is left over after you have been taxed and taxed and taxed and then taxed again.
But then the federal government demands a tax on that remainder when you pass away. And it is quite a tax indeed. The maximum rate of the estate tax in 2011 is scheduled to come in at 55%. You don’t need to do a great deal of philosophizing to calculating to look at that number and recognize that something is very wrong here. After you pay all of those taxes at every turn throughout life, the tax man is going to swoop in upon your death and take more than half of your estate?
The estate tax is clearly excessive in its rate, and it is an exercise in double taxation on the same assets. A permanent repeal would seem prudent to many and it is a suggestion worthy of serious consideration.